Motorola, ST, Philips to split $1.4B chip R&D bill

PARISIn a move that shifts the semiconductor R&D landscape, Motorola's Semiconductor Products Sector is joining an STMicroelectronics-Philips Semiconductors partnership to pursue technology R&D in Crolles, France. Under the agreement, announced Friday (April 12), the three companies will evenly split a $1.4 billion investment through 2005 in the 300-mm wafer-based Crolles2 project, including capital expenditures, R&D costs and wafer load for the fab.

Bringing in Motorola was crucial to France's continuing as an R&D center and to the future of the ST-Philips collaboration, said Joel Monnier, corporate vice president and R&D director at STMicroelectronics.

At a time when many semiconductor development and production activities are moving to Asia, the Europe-based three-way alliance "will keep the technology world more balanced," said Bill Walker, senior vice president and general manager of Motorola's Semiconductor Products Sector. The French government welcomed the deal, which was facilitated by the CEA/LETI research organizations, and has committed to providing an undisclosed sum of financial assistance to the alliance.

A month ago, ST and Philips announced an R&D collaboration with TSMC on 90-nanometer CMOS process technology. The newly expanded team, with the addition of Motorola, will continue to work with TSMC on "the development of baseline process technologies and alignment," said Theo Claasen, executive vice president and chief technology at Philips Semiconductors. Over the next five years, the four companies intend to undertake joint work on CMOS generations from the 90-nm node down to 32 nm.

Although the four companies will jointly own any intellectual property emerging from the effort. "options to the process technologies  those developed by Philips and ST and those planned to be added by Motorola, such as silicon-on-insulator and embedded magnetoresistive RAM (MRAM)  will not be shared with TSMC," said Claasen.

Aside from enabling equal access to production capacity, a key provision of the alliance is the sharing of the chip makers' "crown jewel" technologies to advance the pace of development. The triumvirate is betting, for example, that its access to the pilot line in Crolles will help speed MRAM technology to production, said Motorola's Walker.

The goal for process technology is to "set a de facto industry standard to which other semiconductor companies and IP vendors can target their products," said Philips' Claasen.

Consolidation defined

To weather explosive R&D expenses and the high cost of semiconductor manufacturing, many in the industry consider consolidation inevitable among chip companies. But consolidation doesn't necessarily mean mergers and acquisitions, Claasen said. "It doesn't have to be done [only] by merging companies; it can be done by cooperation among competing companies."

Motorola chose the ST-Philips team over two other groups of companies, both based in Asia, with which it had been in negotiations for several months. Motorola declined to identify those other companies, but Walker did say it had already notified those parties of its plans to work with the European team.

"We will not be pursuing additional joint development partners," said Walker, although Motorola "may be announcing a separate manufacturing alignment deal shortly."

The companies made it clear that the alliance is meant to be a genuinely equal partnership. "All alliances are different in nature," noted Philips' Claasen.

Motorola's Walker agreed, saying, "Some alliances are very one-sided, more like a dictatorship than a partnership." In some, he said, "one company develops the technology and sells it to the other companies."

With CEA/LETI acting as a facilitator, Motorola reached the deal with ST and Philips in only four months. "This deal was the fastest ever negotiated in terms of execution. Walker claimed. "Let's hope that the execution of our technology development will be just as speedy."